Waterfront Property Prices Going Up, Up, Up…

So, you’re thinking about buying that coveted Minnesota & Wisconsin icon - the cabin up north. You have been watching the market for a year or two or three and prices have been increasing a lot faster than your savings account. In my humble opinion, waterfront property prices are going to continue to rise for the next 20+ years. I cannot say that I am 100% positive that we will see the same 20%-30%-40% + annual increases, but I am very bullish on the waterfront property market long-term.

You’ve heard it before, “they can’t make any more of it” and you know, its true – “they” really can’t. Besides the fact that waterfront property is a finite commodity, many lake areas are putting major restrictions on lot sizes, making it increasingly difficult for large waterfront parcels to be broken up and sold off as smaller lots. I think that I can safely say that this is a trend that we will see continue – and most likely grow.

Supply and Demand…Economics 101 taught us all simplest of equations:

Demand Up + Supply Down = Higher Prices.

Over the next 12 years we will see the largest and wealthiest generation in our country’s history begin to enter their retirement years. I expect we will see many baby boomers move some of their retirement savings/investments from the stock market to the vacation home market. Last year was just the tip of the iceberg and the second home market became the fastest growing sector of the real estate industry. We will also see a huge transfer of wealth over the next 20 years and the coveted cabin up north will be in reach for many Gen X’ers as they inherit their parent’s estates.

My take on the “real estate bubble”…I am often asked if I think lakeshore prices are going to flatten or even come down. In my opinion, the real estate bubble is very, very real – on the east and west coast. When a starter home costs $850,000 - $1M in parts of California and New York – there is bound to be a correction. Common sense tells me that it is going to be very difficult for your average first time homebuyer to go from apartment rent to a $1M mortgage – and this is what “they” are talking about when they talk of a real estate bubble.

Common sense also tells me that the luxury real estate market is a different animal. Yeah, a small lake cabin (complete with outhouse and propane lighting) is a luxury, not a necessity. Several recent studies and surveys show that the American Dream has changed from “Home Sweet Home” to “Home Away From Home” and if you are planning to sit and wait for waterfront property prices to come down, you may be waiting 20 years.

When I bought a small lake place up north a few years ago, my year-round neighbor across the road (gorgeous home, but not on the lake) came over and told me that he considered buying my place - but the price was way too high – he could not imagine paying that much for that place. I wonder what he was thinking when I sold the place two years later at a 40% profit.

Article Source: http://www.realestatepropertyarticles.com.

About the Author:
Co-founder of LakePlace.com. View our blog at http://www.pineneedlelawn.com